Kospi falls 10.2% as Asian tech stocks plunge after China chip report

South Korea's Kospi fell 10.2 percent to 6,066.21 around 0330 GMT on Tuesday as semiconductor shares led a sharp Asian technology sell-off after a report of a Chinese chipmaking breakthrough added to doubts over the AI-driven rally.

SK hynix and Samsung lost around 13 percent in Seoul, helping drag the index down after trading had earlier been halted by a 20-minute circuit breaker. AFP reported that the two companies had fallen almost 50 percent from all-time highs last month, while the Kospi was down more than 30 percent.

Website The Information reported that China's Shanghai Yuliangsheng had started mass production of a chipmaking technology long dominated by Dutch firm ASML. The report added to concerns that technology valuations had risen too far after a two-year AI-linked rally.

Tokyo's Nikkei 225 fell 4.3 percent, with Kioxia down 18 percent and Advantest and Tokyo Electron down 11 percent. Taipei was also down more than four percent as TSMC declined. Hong Kong was flat and Shanghai's Composite was down 0.6 percent.

The declines followed losses on Wall Street, where the Philadelphia Semiconductor Index dropped 2.2 percent. Sandisk fell 11 percent, Advanced Micro Devices and Nvidia lost around five percent, and ASML shed more than eight percent in Amsterdam.

Stephen Innes of SPI Asset Management wrote that semiconductor fundamentals had not collapsed, but that markets were no longer willing to value AI promises "at almost any price." Traders were awaiting earnings from SK hynix, Samsung, Kioxia, Microsoft, Meta, Apple and Amazon.

Oil prices also fell as investors watched possible diplomacy over the US-Iran conflict and the Strait of Hormuz. Donald Trump said there was a "good chance" of a deal to end hostilities, and reports said Oman and Iran were trying to reach an agreement to restart shipping through Hormuz. Brent and West Texas Intermediate each lost more than one percent in Asian trading after sharper falls on Monday.